Nassim Nicholas Taleb said:
I noticed that people do not like to insure against something abstract; the risk that merits their attention is always something vivid.
People overvalue their knowledge and underestimate the probability of their being wrong.
Before the discovery of Australia, people in the Old World were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence. The sighting of the first black swan might have been an interesting surprise for a few ornithologists, but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single black bird. What we call here a black Swan is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. Black Swan logic makes what you don’t know far more relevant than what you do know. Consider that many Black Swans can be caused and exacerbated by their being unexpected.
Procrastination is the soul rebelling against entrapment.
If you know, in the morning, what your day looks like with any precision, you are a little bit dead--the more precision, the more dead you are.
People used to wear ordinary clothes weekdays and formal attire on Sunday. Today it is the exact reverse.
Quite revealing of human preferences that more suicides come from shame or loss of financial and social status than medical diagnoses.
‘Wealthy’ is meaningless and has no robust absolute measure; use instead the subtractive measure ‘unwealth,’ that is, the difference, at any point in time, between what you have and what you would like to have.
Randomness is indistinguishable from complicated, undetected, and undetectable order; but order itself is indistinguishable from artful randomness.
The internet broke the private-public wall; impulsive and inelegant utterances that used to be kept private are now available for literal interpretation.
A good foe is far more loyal, far more predictable, and, to the clever, far more useful than the most valuable admirer.
I make the bold speculation that many things we think are derived by skill come largely from options, but well-used options.
The central tenet of the epistemology I advocate is as follows: we know a lot more what is wrong than what is right, or, phrased according to the fragile/robust classification, negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works). So knowledge grows by subtraction much more than by addition--given that what we know today might turn out to be wrong but what we know to be wrong cannot turn out to be right, at least not easily. Since one small observation can disprove a statement, while millions can hardly confirm it, disconfirmation is more rigorous than confirmation.
If a book has been in print for forty years, I can expect it to be in print for another forty years, But, if it survives another decade, then it will be expected to be in print another fifty years. This, simply, as a rule tells you why things that have been around for a long time are not ‘aging’ like persons, but ‘aging’ in reverse. Every year that passes without extinction doubles that additional life expectancy. This is an indicator of some robustness. The robustness of an item is proportional to its life!
We are built to be dupes for theories. But theories come and go; experience stays. Explanations change all the time, and have changed all the time, and have changed all the time in history with people involved in the incremental development of ideas thinking they always had a definitive theory; experience remains constant.
If you do not take risks for your opinion, you are nothing.
The ethical is always more robust than the legal. Over time, it is the legal that should converge to the ethical, never the reverse. Hence: laws come and go; ethics stay.
Alexander said that it was preferable to have an army of sheep led by a lion than an army of lions led by a sheep. Alexander understood the value of the active, intolerant, and courageous minority. Hannibal terrorized Rome for a decade and a half with a tiny army of mercenaries, winning twenty-two battles against Romans, battles in which he was outnumbered each time. He was inspired by a version of this maxim. This large payoff from stubborn courage is not limited to the military. ‘Never doubt that a small group of thoughtful citizens can change the world. Indeed, it is the only thing that ever has,’ wrote Margaret Mead. Revolutions are unarguably driven by an obsessive minority. And the entire growth of society, whether economic or moral, comes from a small number of people. Society doesn’t evolve by consensus, voting, majority, committees, verbose meetings, academic conferences, tea and cucumber sandwiches, or polling; only a few people suffice to disproportionately move the needle. All one needs is an asymmetric rule somewhere--and someone with soul in the game. And asymmetry is present in everything.
Cato’s injunction: he preferred to be asked why he didn’t have a statue rather than why he had one.
Scars signal skin in the game. People can detect the difference between front-and back-office operators.
What we learn from professionals in the real world is that data is not necessarily rigor. It seems to me that people flood their stories with numbers and graphs in the absence of solid or logical arguments. Further, people mistake empiricism for a flood of data. Just a little bit of significant data is needed when one is right, particularly when it is disconfirmatory empiricism, or counterexamples: only one data point is sufficient to show that Black Swans exist.
We know the wrong better than what’s right; recall the superiority of the Silver over the Golden Rule. The good is not as good as the absence of bad.
Hire the successful trader, conditional on a solid track record, whose details you can understand the least.
You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.
Finally, when young people who ‘want to help mankind’ come to me asking, ‘What should I do? I want to reduce poverty, save the world,’ and similar noble aspirations at the macro-level, my suggestion is:
- Never engage in virtue signaling;
- Never engage in rent-seeking;
- You must start a business. Put yourself on the line, start a business.
Yes, take risk. Courage is the highest virtue. We need entrepreneurs.
Journalism is about ‘events,’ not absence of events, and many historians and policy scholars are glorified journalists with high fact-checking standards who allow themselves to be a little boring in order to be taken seriously. But being boring doesn’t make them scientists, nor does ‘fact checking’ make them empirical, as these scholars miss the notion of absence of data points and silent facts. Learning from the Russian school of probability makes one conscious of the need to think in terms of one-sided inequalities: what is absent from the data should be taken into account--absence of Black Swans in the record doesn’t mean these were not there. The record is insufficient, and such asymmetry needs to be permanently present in one’s analysis. Silent evidence should be the driver. Reading a history book, without putting its events in perspective, offers a similar bias to reading an account of life in New York seen from an emergency room at Bellevue Hospital.
If my detractors knew me better, they would hate me even more.”
Latent Thoughts #18
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Painting: Apotheosis of Homer by Jean Auguste Dominique Ingres